Today is a two-for. I will be traveling to and from Ann Arbor on Wednesday so there will be no blog on Wednesday. I will be back on Thursday if all goes well.
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I am still trying to get my head around the collapse of the Francis Scott Key Bridge in Baltimore early morning on Tuesday. The sight of the bridge collapsing so completely is very hard for me to understand and comprehend.
Thanks to the quick thinking of the cargo ship crew to warn of the impending collision with the bridge, the bridge was shut down to nearly all traffic. This had a significant impact on reducing the people killed during this tragic accident. Those involved in taking action to close the bridge to cars in such a short time, get my Orchid of the Day.
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Officially the NHL playoffs are three weeks away, but for all intents and purposes the playoffs for the Detroit Red Wings start today.
At the end of February, the Wings looked like they had a playoff position locked up as they were eight points up for the final playoff position. Unfortunately, disaster struck in the form of an injury to their captain and best player, Dylan Larkin. The Wings went on a seven-game losing streak and fell below the final playoff position.
The Wings are playing the Washington Capitals in D.C. tonight. The Caps are one point ahead of the Wings for the eighth and final playoff spot, with the Caps having played one less game than the Wings. Every point will matter at this point. The Wings can ill afford any letdowns or injuries to key players. The Wings have eleven games remaining with seven of those on the road, where the Wings have a losing record. There is no room for error, which is why I say the playoffs start tonight for the Wings.
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I really like the Biden administration’s plan for tightening the standards for financial advisors of retirement plans. The following are excerpts from an article appearing today in the NY Times.
This seems like an issue everyone can agree on: Financial professionals should be required to handle our retirement money with the utmost care, putting investors’ interests first.
Most retirement plan administrators who oversee the trillions of dollars held in 401(k) plans are already held to this standard, part of a 1974 law known as ERISA, which was established to oversee private pension plans before 401(k)s existed. But it doesn’t generally apply, for example, when workers roll over their pile of money into an I.R.A. when they leave a job or retire from the work force. Nearly 5.7 million people rolled $620 billion into I.R.A.s in 2020, according to the latest Internal Revenue Service data.
The Biden administration’s final regulation, which will be released this spring, is expected to change that and patch other gaps: Investment professionals selling retirement plans and recommending investment menus to businesses would also be held to its fiduciary standard, as would professionals selling annuities inside retirement accounts.
The Biden administration’s plan — and the final rule could differ from the initial October proposal — would require more financial professionals to act as gold-standard fiduciaries when they’re making an investment recommendation or providing advice for compensation, at least when holding themselves out as trusted professionals.
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I want to share excerpts from an article by Tim Wu, a professor of law at Columbia University who served on the National Economic Council as a special assistant to the president for competition and tech policy. I find it thought provoking as he presents a different economic policy from the previous two popular approaches to redistribute wealth in the country. The Reagan or conservative method of top-down distribution hasn’t worked and the liberal method of taxing the rich and hasn’t worked. In the last 40 years the gap between the wealthy and the poor has widened. Here are excerpts from the article.
Since the early 2000s, most Americans have generally been dissatisfied with the economy, and many are insecure about their place in it… This is a stubborn, long-term disgruntlement…Today’s familiar left-right economic debates, for example, in which the left wins by taxing and spending and the right wins by cutting taxes, have precious little to do with the more ambitious vision of Biden’s administration. Americans are desperate for a fundamentally different, fairer kind of economy, and Mr. Biden is working to give them one. The urgent challenge, politically, is helping voters understand that.
It is worth remembering that over the past 40 years the orthodoxy of the center-left has been a tax-and-transfer strategy. It has meant tolerating or even encouraging corporate consolidation and profit while maintaining the expectation that those profits would be redistributed in the service of the less powerful and less well-off. The popular metaphor of a national pie suggested focusing first on growing the pie and then on dividing it up equitably. The problem is that “later” never seems to come.
The pie metaphor has always been misleading: An actual pie must be divided before being eaten. But corporate profits aren’t like that. They go directly to the owners and managers and usually stay there. Redistributing profits requires prying money out of some very strong hands, hands that become stronger the wealthier they get. In a political system in which money talks, the pie will rarely get divided.
The Biden administration, in a break with center-left orthodoxy, seeks to address economic inequality not through taxation and transfers but through policies that allow more people and businesses to earn wealth in the first place…The goal is not the redistribution but the pre-distribution of wealth….This approach calls for a different kind of capitalism — one that opposes the centralization of economic power and favors a market in which wealth can be earned by people and businesses in a broader set of regions, drawn from a wider array of social classes and involving a more diverse set of industries.
… It is at the heart of the Justice Department’s continuing New Deal-style antimonopoly campaign which has already prevented dozens of…mergers… It undergirds Mr. Biden’s renewed support for organized labor, as well as his worker-centered trade policy and the increasingly combative approach to the economic threat posed by China. It explains the reinvigoration of industrial policy on Capitol Hill, most notably through supporting regional manufacturing like the huge semiconductor factories being built in Arizona by the Taiwan Semiconductor Manufacturing Company. It also underlies the administration’s campaign against junk fees across the economy, including the creation of a rule limiting credit card late fees that will save Americans an estimated $10 billion a year.
These efforts are usually discussed and understood separately. But they share an underlying logic: All are aimed at leveling imbalances of economic power, and all assume that the economy works better for most Americans when it is more competitive and when earning power is more broadly distributed.
There is arguably nothing more American than the balancing of power. The authors of the Constitution of the United States believed that unaccountable and centralized power was the chief evil facing any nation. Americans understand this instinctually.
The National Football League, the nation’s most popular and successful sports league, doesn’t allow the richest organizations in places like New York or Los Angeles to build unbeatable teams. It has developed a structure of competition that rebalances power by way of a draft, salary cap and other techniques. No one thinks it unusual that a small city like Kansas City, Mo., can become a football powerhouse. In its own way, the N.F.L. — widely accepted as fair by Americans — provides a model for the U.S. economy.
My comment: It is not only the NFL that has followed this model. The NBA, the MLB, and the NHL have all transitioned to similar models in the last twenty years. These leagues are no longer dominated by teams with owners who had unlimited funds to buy their way to championships. Small market teams enter each season with a chance to win a championship because of the change in the economic model that has been instituted. The models were developed through negotiations between the owners and the players. Both sides had to make sacrifices for the models to work. This did not happen until the players had developed strong unions and the owners saw that fair competition from all teams was best for the long-term success of the league.
Most people understand all too well that those in the broad economic middle of the country are having a much harder time than their parents did — and that something went seriously astray starting in the early 2000s. They want a more fundamental kind of economic change. To succeed in the 2024 election, Mr. Biden needs to convince voters that he has begun a long fight against today’s toxic form of capitalism. He needs them to understand that he is making the economy fairer and more productive.
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Quote of the Day: “You are literally accusing the Manhattan D.A.’s office and the people assigned to this case of prosecutorial misconduct and trying to make me complicit in it,” Justice Juan Merchan, as he took the former president’s lawyers to task yesterday for what Merchan characterized as overheated rhetoric and transparent attempts at foot-dragging.
Orchid of the Day: See above story about the quick action to prevent cars from entering the Francis Scott Key Bridge moments before it collapsed.
Onion of the Day: The NBC executives who thought it was a good idea to bring Ronna McDaniel on board as a political adviser. The execs were totally out of sync with the existing NBC news staff, who have staged an uproar since McDaniel’s hiring. Today NBC announced that McDaniel is being relieved of her duties.
Question of the Day: How does a bridge the size of the Francis Scott Key Bridge collapse so completely after being hit in one pillar or pilon?
Video of the Day: Unbelievable and incomprehensible
WATCH: Video shows Baltimore Francis Scott Key Bridge collapse after ship strike (youtube.com)